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direct evidence of the value of the sewer line is its cost and
that the actual cost of an asset is direct evidence of its fair
market value on the date of construction. Cost is cogent
evidence of value. See Guggenheim v. Rasquin, 312 U.S. 254, 258
(1941). This Court has held that cost may be considered in
valuing property. See Cupler v. Commissioner, supra at 955.
In an attempt to discredit the use of the cost method of
valuation, Mr. Jones calculated the cost per foot incurred by
petitioner to construct the sewer line in question and projected
that cost to all of Imperial's sewer lines contending that
respondent's use of the cost method of valuation would result in
an unreasonable, overall valuation of Imperial at about $10
million. Mr. Jones' extrapolation is irrelevant. It is our task
to value a single sewer line and not Imperial as a whole. We do
not believe that Imperial's older sewer lines, or any lines
constructed more recently than the sewer line in question, would
have any direct relationship to our valuation of the subject
sewer line. Individual sewer lines would certainly have
different operating costs and different construction costs, and,
therefore, would be of different value to Imperial. If the sewer
line in question cost more to construct than Imperial's other
4(...continued)
valuation method.
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